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Exam 13: Selecting and Managing Entry Modes

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Question 41

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Scenario: Sports Stuff Inc. Herb Graham is vice president of Sports Stuff Inc.,a business that develops,manufactures,and markets sports products.The company is looking to expand its operations into the European market.Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe,the company will achieve success there. -The board of directors of Sports Stuff is concerned with the firm's lack of experience in foreign markets.To minimize this problem,Herb recommends that the firm create a ________ with a local partner.

A) joint venture
B) turnkey project
C) wholly owned subsidiary
D) franchise

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Question 42

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What are the different financing methods available to exporters and importers?

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Export/import financing methods designed...

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Question 43

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Selling goods or services that are paid for,in whole or part,with other goods or services is called ________.

A confirmed letter of credit is guaranteed by both the exporter's bank in the country of export and the importer's bank in the country of import.

A ________ joint venture is formed when each partner requires the same component in its production process.

Which of the following statements is true of licensing?

Export/import financing in which an exporter ships merchandise and later bills the importer for its value is called ________.

What are the differences between a turnkey project and a strategic alliance?

A sight draft extends the period of time following delivery by which the importer must pay for goods.

What are the advantages of pursuing a wholly owned subsidiary as an entry strategy?

Products for which there are fewer substitutes can more easily absorb higher shipping and production costs.

The open account method of export/import financing is used when the two parties are unfamiliar with each other.

Which of the following financing methods entails the greatest risk for exporters?

The brand name or trademark of a company is normally the single most important item desired by a franchisee.

The most common method used for buying and selling goods internationally is licensing.

Scenario: Sports Stuff Inc. Herb Graham is vice president of Sports Stuff Inc.,a business that develops,manufactures,and markets sports products.The company is looking to expand its operations into the European market.Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe,the company will achieve success there. -Herb has been exploring another type of entry mode that requires ongoing assistance on the part of one firm,often in the form of start-up capital,management training,or location advice.Herb is most likely considering ________.

Scenario: Wang's Techno Toys Ann Wang has been successfully running Wang's Techno Toys that sells high-tech toys in the domestic market.Continually increasing and stiff competition at home has now forced Wang's Techno Toys to enter international markets through direct exports. -In some countries,people exchange electronic goods for Techno Toys instead of paying money for them.This practice is known as ________.

A(n) ________ is guaranteed by both the exporter's bank in the country of export and the importer's bank in the country of import.

A(n) ________ exports products on behalf of an indirect exporter.

Letters of credit are popular among traders because most of the risks are assumed by ________.